Six Sigma Case Study Channel Strategy

Transcription

1 Six Sigma Case Study Channel Strategy Atul Goyal Master Black Belt, Trainer, Executive Coach Mobile:

2 Your Instructor: Atul Goyal Green Belt - Black Belt - MBA, Northwestern Univ - Project management certification - Master Black Belt - Coached and trained 10 GB/BB candidates Motorola Acxem Walmart - Warranty Reduction - 10% US$35M - Defect rate forecast Software reliability - Testing design cycle time reduction - NPI time to market reduction by 4 months - Escaped defects triage process - Front end planning processes - Web Marketing - Click through - NPI Process - Sales processes - Comm. Effectiveness - Click through - Web Traffic - Content strategy

3 Differential Channel Incentives 3

4 Methodology - DMAIC Question - What is the problem? - What is customer saying? - How are we meeting the needs today? Tool name - Project Charter - Voice Of Customer (VOC) - Process Map - Helps us define the business case for change - What is our current Performance? - Incentives vs. Sales - Customer Satisfaction - Why is the problem happening? - Fishbone Diagram - 5 Whys - How do we solve the issues? - Idea Generation (Brainstorming) - What-If modelling - Pilot - How to institutionalize the change? 4 - Automated Workflow - Change control Boards - Work with sales team to execute pilot and then slowly roll out to all accounts - Grandfather any existing contracts and offer sunset clauses on contracts

5 Problem Statement What When Where - Penalizing resellers when our account grow ($500K) - Program management is very complex Producer customers purchases grow to > $500K, Customer accesses new price list, Veterinarians are required to purchase direct (cut distribution) and incentive payments drops to 5% from 7,9,12% Large customer segment Who The most important resellers and producer customers Desired State Why it s worth solving the problem? Our reseller partners grow as their customers grow Lost share, lost revenue Large resellers working actively to keep their clients below $500K of purchase, market share loss to competitors as these customers grow. 5

6 Voice of the End User/Vet Requirement 1 I want the best price, why others are getting better prices than me Requirement 2 I want to purchase where I want (do not want my vet to lose out) Requirement 3 Reward me for growing my business with you Requirement 4 Predictable prices for the year Requirement 5 I want to use the product that works Requirement 6 6

7 Voice of the Reseller Requirement 1 I want the best non promotional price (do not want to jump through the hoops to figure out the price). Every day low pricing?????? Requirement 2 I want to purchase where I want (> 500K, vet has to buy direct) Requirement 3 Reward me for growing my business with you, Do not penalize me for growing... > 500K promotion drop down to flat 5% from 7%, 9% and 12% Requirement 4 I want to recommend/use products I am confident in. Requirement 5 Do not have money to tie up in Spring/Fall promotions bulk purchases, do not want to carry inventory (returns policy changed and is more restrictive now) Requirement 6 7

8 Describe the Voice of the Customer Customer / Stakeholder What Do They Care Most About? What What Measurable Performance Target Most Bothers Them Right Now? Would wow Them (or else your boss)? I want to use the product that works Product cost more Producer Veterinarian I want to give business to my vet I want to buy where I want, when I want I want to prescribe the product that works I do not have time to track rebates Distributor I would like to earn more incentive Reseller Producers like simplicity and predictability Other value add (on farm trials, trainings, VMIPS) LE programs is difficult, multiple price points that need to be managed Growth drivers may not fit the business LE programs is difficult, multiple price points that need to be managed Growth drivers may not fit the business Pay me for the business I bring LE programs is difficult, multiple price points that need to be managed Don t penalize me for growing account with you Growth drivers may not fit the business 8

9 Current Selling Structure <= $499,999 XYZ >= $500,000 XYZ Distributor, Large Reseller CB $1 $1 RSA - 7%, 9%, 12% 60% 5% RSA - 7%, 9%, 12% Direct purchasing Vet 40% LE Producer CB $1 $1.06 to $0.98 Distributor, Large Reseller CB RSA - 5% 60% 40% LE Producer Direct purchasing Vet 93c CB 9

10 How do our customers buy?

11 Root Causes 11

12 Objectives Enable growth Put more money in the channels/chargebacks Take money from Chargebacks, give more in RSA Take money from channels, give more in Chargebacks Increase incentive productivity $80M incentives $500M in sales $1 incentive gives us $8.3 in sales Reward influence/value add VCPR relationship vs. Reseller Vet

13 Near term options Enforce current Tiers Right size Tiers to account for portfolio growth and inflation Eliminate a Tier Add a new Tier Allow customers to buy from their preferred place (Direct/Reseller/Distributor)

14 Option#3 + Two Tier Enable growth Take money from Chargebacks, give more in RSA Removes $500K barrier (More money for Vets/Resellers) Right sizes the Tiers Assumption Vet is the prime influence on buying decision, CB reduction could lead to some sales drop but over compensated by reseller sales

15 Option#5 + Two Tier Less attractive than Option#3 + Two Tier on a net $ basis Hits the same pain points Primarily producer charge back impact, resellers impact is the same

16 2015 Pilot 16

17 2015 Plan Replace multiple incentive structure with 9% across the board. Roll out this change to top 12 resellers and evaluate results Expected results: Incentive $ neutral Enable resellers to increase topline by $12M for

18 2016 and beyond Rollout the new structure to all channels and producers Workflow changes with SAP/SalesForce.com Change control board to evaluate special requests 18

19 QUESTIONS 19